Even the coolest commercial areas affected by the pandemic slowdown
Even Gangnam, the country’s hippest shopping district, has not escaped the global pandemic.
Many of its stores were forced to close, while incomes plummeted for those who survived.
According to a Korea Agro-Fisheries & Food Trade Corporation (aT) study released on Monday, the number of stores in the district’s most popular area fell by 16.7 percent between 2019 and 2021.
In 2019, before Covid-19 hit Korea, the region had 419 restaurants. This number fell to 392 in 2020 and to 349 last year.
In January, 335 restaurants were still open.
Revenues from these restaurants have fallen 45% over the past two years.
The total was 367.7 billion won ($300 million) in 2019, 244.8 billion in the first year of the pandemic and 201.9 billion won in 2021.
The stores that were studied are those located at exits No. 11 and No. 12 of Gangnam subway station and at exits No. 4 and 5 of Sinnonhyeon station.
Strict social distancing regulations, including a limit on the number of people who can eat together and curfews for businesses, have had a huge impact.
Many shops on the first floor, considered prime real estate, are currently vacant.
“The area studied by aT is a fashion-sensitive commercial district,” said Kim Young-gap, professor of hospitality management at Hanyang Cyber University. “It is an area where there are trendy restaurants and as such, there is a huge influx of young customers.
“It seems that even young people have reduced their spending as they reacted sensitively to Covid-19.”
As businesses struggled, prices surged.
The price of Americano’s cup in the region rose 78.8 percent from 2,423 won in 2019 to 4,333 won in January this year.
Sushi is now 52.4% more expensive, rising from 10,192 won to 15,534 won over the same period.
Pizza prices have increased by 50.8%, while steak is now 49.1% more expensive.
The price increase was affected not only by rising ingredient prices, but also by rising labor costs.
Higher prices may have hit businesses.
The agency published a study on food trends in November.
The study looked at 15 major shopping districts across the country, including: Hongdae, Seoul; Seomyeon, Busan; Jungangno Station, Daegu; and Sangmu, Gwangju.
Comparing 2019 with June to October 2021, revenue in all but two areas declined.
In Hongdae, the number of stores decreased by 19%. Sales in Hongdae fell 73% from 654 billion won to 171.3 billion won over the same period.
The report notes that Hongdae is a commercial district that caters to a more diverse customer base than other commercial districts.
Restaurants, especially those selling alcohol, have been hit the hardest by social distancing.
One of the biggest changes as a result of the pandemic is that customers are now emphasizing hygiene.
In a study conducted between September and November last year among 1,341 people aged 20 to 69, 92.1% said they considered hygiene a key factor when choosing a restaurant.
It ranks second behind taste and quality, chosen by 94.3%. Price was 86%, service 81.1% and reputation 80%.
In the same survey in 2019, taste was 71.6%, price 46.2% and convenience 38.4%.
Only 22.7% chose hygiene.
As the government has removed almost all social distancing restrictions, business in these areas is expected to rebound.
“Since the beginning of this year, as the government began to ease regulations, sales in major trading districts have shown signs of recovery,” said Kim, a professor at Hanyang Cyber University. “Although business will not immediately return to pre-pandemic levels, with more people going out, spending is expected to increase.”
BY LEE HO-JEONG [[email protected]]